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Hi Lift Pty Ltd v Setae [2000] PGNC 71; N2004 (17 November 2000)

N2004

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

OS 329 of 2000

BETWEEN

HI LIFT COMPANY PTY LIMITED

Plaintiff

AND

MIRI SETAE, MBE, SECRETARY
DEPARTMENT OF AGRICULTURE & LIVESTOCK

First Defendant

AND

THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Second Defendant

Waigani : Sevua, J
16th August & 17th November, 2000

REAL PROPERTY – Indefeasibility of title – Effect of Statutory breach and irregularities on registered title - Tantamount to fraud – Affects indefeasible title.

Cases cited:
Mudge & Mudge v. Secretary for Lands [1985] PNGLR 387.
Emmas Estate Development Pty Ltd v. John Mea & Ors [1993] PNGLR 215 (majority view applied).
Steamships Trading Company Limited v. Minister for Lands & Physical Planning, Garamut Enterprises Limited & Ors, unreported, N.1959, 10th May, 2000.

Counsel:
S. Kassman for Plaintiff

J. Kais for Defendants

SEVUA, J: This is an action for possession of land which was transferred to this Court from the Port Moresby District Court.

A brief factual background is necessary for limited purpose only. The plaintiff had filed a complaint in the Port Moresby District Court on 18th October, 1999 (Complaint No. 2745/1999) seeking an order for possession of land described as Portion 2413 Milinch Granville, Fourmil Moresby, Volume 20, Folio 85, which land is located at Konedobu in National Capital District.

By order of Senior Magistrate, Iova Geita, this proceeding was transferred to this Court on 9th June, 2000 because the title to that land was in dispute. The order for transfer of proceedings was made pursuant to s.24 of the District Courts Act. The issue in respect of title is therefore to be determined by the National Court as the District Court lacks jurisdiction, and the presiding magistrate quite correctly referred to s.21 (4) (f) of the District Courts Act.

By way of historical background, the Department of Agriculture and Livestock (hereinafter referred to as DAL) had occupied part of Portion 2413 since 1985. On 27th August, 1993, the Department of Lands granted a Business (Light Industrial) Lease to the plaintiff at Waigani described as Section 38, Allotment 14, Hohola. Unbeknown to the Department of Lands, that lease had previously been issued to Tabudubu Pty Limited. The grant to the plaintiff created a double allocation or grant of the one lease. The Lands Department subsequently revoked the grant of Section 38, Allotment 14, Hohola to the plaintiff.

On 8th July, 1998, the plaintiff was granted a lease over Portion 2413, which was originally zoned Public Institutions, and was previously, and up to-date, occupied by Department of Agriculture and Livestock. There is no dispute that DAL has always occupied this property even up to and including the date of grant of the lease to the plaintiff. On 11th June, 1999, the plaintiff issued a notice to quit and served it on the first defendant. Since then the first defendant has objected to the rezoning of this property by the National Capital District Commission Physical Planning Board. On 18th October, 1999, the plaintiff commenced proceedings in the District Court which was eventually transferred to this Court.

A number of submissions in law have been raised by both counsel, however, I do not propose to canvass all those arguments, even though, I have heard and considered all of them.

The plaintiff argued that it has indefeasible title to the land which cannot be nullified unless there is fraud. Mr Kassman for the plaintiff relied on Mudge and Mudge v. Secretary for Lands [1985] PNGLR 382, a decision of the Supreme Court which upheld the principle of indefeasibility of title, protected by s.33 of the Land Registration Act, Ch. 191.

The defendants relied on Emmas Estate Development Pty Ltd v. John Mea & Ors [1993] PNGLR 215, another decision of the Supreme Court, which also considered and acknowledged the principle of indefeasibility of title, but did not apply the principle for the reasons stated therein.

I do not think that the defendants really dispute the fact that title to Portion 2413 was granted to the plaintiff. So I am entitled to find as a fact that the title to Portion 2413 was issued to the plaintiff on 8th July, 1998.

However, there are several issues that concern this Court and it is necessary to address those here because I believe, at the end of the day, the justice of the case will be realised and appreciated.

Firstly, the undisputed evidence is that the lease over Portion 2413 was granted to the plaintiff on 8th July, 1998. However there is no evidence at all as to how the plaintiff acquired the land. That is to say, there is no evidence as to whether the land was advertised pursuant to s.68 of the Land Act 1996 or whether the land was exempted from advertisement under s.69 (2) of the said Act. All that the plaintiff could say was that it was issued with the title to the land. But what procedure under the Land Act was followed in the allocation of this land?

I consider that this is a crucial issue in the light of the undisputed evidence that the Department of Agriculture and Livestock had occupied the land since 1985, and has improvements valued at half a million kina. Surely, if the land had been advertised, DAL would have taken appropriate measures to protect its interest. If it was not advertised, I would consider the grant to the plaintiff as being quite unfair and irregular because the public interest and more particularly, the interest of DAL was never considered, so it seems.

Secondly, there is also undisputed evidence that Portion 2413 was a Public Institutions zone. The State Lease described as Volume 20, Folio 85 and granted to the plaintiff clearly reveals that the lease was a Business (Light Industrial) Lease. Infact, there is undisputed evidence that the land was zoned Public Institutions, not a business lease. The National Capital District Commission Physical Planning Board was requested to rezone Portion 2413 to Commercial Zone except that parcel occupied by DAL. I consider this to be contrary to the zoning requirement under s.67 of the Land Act. The fact that a Business (Light Industrial) Lease was granted over a land zoned as Public Institutions, was contrary to s.67 of the Land Act.

It is my view that the grant of a business lease to the plaintiff was irregular because, Portion 2413 was never a commercial zone, but a Public Institution zone. It was after the lease had been granted to the plaintiff that arrangements for a rezoning were made.

Thirdly, whilst there is no evidence of fraud, I consider that a presumption of fraud exists. Here, the Department of Agriculture and Livestock together with other public institutions like Department of Transport and National Intelligence Organisation occupied Portions 2413 since 1985, until fire destroyed the other offices. DAL has infrastructure improvements valued at K500,000.00 on the land. Was there any investigation carried out by the Lands Department prior to the grant of the lease to the plaintiff on 8th July, 1998? If there was an investigation, was the interest of the public held by DAL taken into account? If not, why was the interest of a private legal entity given precedence over the interest of the public? In my view, it must seem quite an irregular and suspicious dealing for the Department of Lands to grant a lease over Portion 2413 to a private company when the public interest held by the Department of Agriculture and Livestock existed. That is the reason I said that presumption of fraud existed in this case. How could the public interest, be ignored by the Department of Lands? And what is so special about the plaintiff company that its interest seemed to have been given priority over public interest?

It is my view that the decision of Emmas Estate be preferred to that of Mudge. For I consider that the concerns I have highlighted here should invalidate the plaintiff’s indefeasible title. I adopt the reasons given by the Chief Justice at page 210 as the basis for which I believe the plaintiff’s title to Portion 2413 should not remain indefeasible. The irregularities and illegalities I have referred to here are sufficient, in my view, to invalidate the registration of the plaintiff’s title.

Whilst these matters may not strictly amount to fraud, I do not accept that the public interest over this land held by DAL can be easily ignored. I do not believe that the issues I have raised, coupled with possible fraud on the part of officers of the Lands Department ought to prevail to deprive the public of a portion of land which it has held through the Department of Agriculture and Livestock for over ten years.

I consider that the public through DAL has become the pawn in the sandwich here. The public through the Department of Agriculture and Livestock was an innocent party, deprived of its right and interest to Portion 2413 as a result of the unfair and irregular dealings by the Department of Lands.

In fact, in Emmas’ case, while the Supreme Court acknowledged the principle of indefeasibility of title discussed in Mudge, the majority in the latter case concluded that irregularities tantamount to fraud was sufficient to overturn a registered title. That is the position I take in the present case and I apply that principle here. The irregularities in the present case which I have alluded to, are in my view, sufficient to invalidate or nullify the registration of the plaintiff’s title because they are tantamount to fraud.

The National Court in the recent case of Steamships Trading Company Limited v. Minister for Lands and Physical Planning, Garamut Enterprises Limited and Ralph Guise and Ors, unreported, N.1959, considered that some of the irregular circumstances apparent in that case were tantamount to fraud. The Court in that case followed the majority view in Emma's case.

I agree with Sheehan, J’s discussions on the purpose of both the Land Act and the Land Registration Act. The Land Act regulates the alienation of State land while the Land Registration Act governs the registration of title to government land after the land is alienated. Section 64 (1) of the Land Act specifically provides that "Government land should not be alienated otherwise than under this Act or another law" I have already alluded to my views on the lack of evidence as to how Portion 2413 was alienated, ie. lack of evidence of advertisement or exemption of advertisement, etc. I think I am entitled to assume that since there is no evidence of how Portion 2413 was allocated to the plaintiff, there were breaches of statutory procedures, which are sufficient to overturn the plaintiff’s indefeasible title.

I reiterate that the plaintiff has not established by credible evidence that there was an open transparency process in the allocation of this land, which open transparency, would include public participation as stipulated by the Act. I say this because, I am sure that, had there been a transparent process, the Department of Agriculture and Livestock would have participated by protecting its right and interest on and over the land. It appears to me that there was exclusion and preference shown, to the advantage of the plaintiff only, and this Court could not, in good conscience, support such lack of transparency and preference to one particular corporate citizen.

In my view, it would be morally wrong for this Court to sanction such irregularities by the Department of Lands by jumping onto the band wagon of indefeasibility of title and riding it despite the apparent breaches of statutory provisions. Therefore, in my view, whilst these irregularities and breaches may not be fraud, they are sufficient to overturn the indefeasible title of the plaintiff. They must affect the registered title.

The plaintiff has submitted that the defendants (to use the words of Pratt, J in Mudge) "are seeking to mount an attack on the principles of indefeasibility of title under the torrens system." The problem with that submission is that, counsel did not appreciate that in Mudge, the Supreme Court did not hear arguments or consider what conclusions it should draw in the event that procedural breaches or irregularities were breaches that resulted in a nullity. Sheehan, J., alluded to this at page 44 of his judgment in Garamut’s case. Pratt, J., was talking about registration of title, not statutory breaches or irregularities. Registration of title, which gives indefeasible title under the Land Registration Act, is one thing, but breaches and or any irregularities under the Land Act, are quite significant that they ought to affect the subsequent registration of title. In my view, such breaches and irregularities under the Land Act, which go to the root of the granting of leases, affect the registration of title so that a title no longer remains indefeasible.

I am therefore of the view that the breaches and irregularities I have alluded to, go to the very root of the granting of the lease or alienating that portion of government land. The plaintiff therefore cannot claim an indefeasible title. I consider that, since the Land Act is primarily the legislation dealing with alienation of government land, the procedures for alienation, must be free from any fraud, breach of statutory provision or irregularities. I believe that good conscience dictate that once there is evidence of, or suspicion of breach of any provision of the Land Act, or irregularities which may not necessarily amount to fraud, the registration of title must be affected so that the registered title holder no longer has a indefeasible title. In other words, the indefeasibility of title remains intact where no breach or irregularity of the Land Act is committed.

For these reasons, the plaintiff’s claim is dismissed. Costs will follow the event in both the District Court and National Court proceedings.
_____________________________________________________________

Lawyer for Plaintiff : Kassman Lawyers
Lawyer for Defendant : Solicitor General